As Facebook explores a broader range of money-making businesses, such as video ads and music streaming, it will need to shake off the growing pains that marked its birth as a public company.
Slowing revenue growth and sagging shares have ratcheted up pressure on Facebook to find new ways to generate sales. At the same time, the world's largest social network will have to assuage concerns about privacy rights, woo investors and stay true to CEO Mark Zuckerberg's pledge that Facebook is more a social movement than a business.
"It's a fine line that they have to straddle," said Victor Anthony, an analyst at Topeka Capital Markets Inc. "It's all part of the growing pains."
Instagram, Facebook's photo-sharing business, incited a backlash last month by fuelling concern that it would sell users' images to advertisers without consent. Facebook also ran afoul of privacy advocates last month after a shift that gave users less voting control over changes to privacy and data-collection policies.
As the company harnesses data from its more than one billion users to help advertisers market wares, Mr Zuckerberg risks alienating consumers and compromising his goal of making the world "more open and connected".
Facebook has already come under scrutiny by regulators in Europe and the US amid concern it hasn't done enough to protect privacy.
Though the stock has pared some losses since September, Facebook's shares are down 26 per cent since its May initial public offering as investors seek evidence that the company can step up advertising-sales growth. Facebook needs more money-making ad products, and it was finding user backlash a tough obstacle, said one analyst last month.
"How much advertising can they push without upsetting the user," they asked.
Analysts on average are projecting more slowing this year.
Revenue may rise 30 per cent to $6.53bn (€5bn) in 2013, compared with estimated 35 per cent growth last year. Sales leapt 88 per cent in 2011. Sales of virtual goods for games such as Zynga's FarmVille, once considered a hot area of growth, declined in the third quarter from the prior period.
Facebook was "just getting started" on new paid products, Mr Zuckerberg said during a Q3 earnings conference call. Still, Facebook has already shown that it can quickly and successfully introduce new products. Shares have rallied 60 per cent since slumping to a low of $17.55 in September on signs that mobile-ad growth is accelerating. Facebook debuted mobile tools last year to take advantage of faster user growth on wireless devices.
Facebook is expected to report $339.3m in US mobile ad revenue for 2012, up from zero the prior year. In 2014, Facebook's US mobile ad revenues may exceed $1.2bn, grabbing 11 per cent of the market, researchers say.
"It's not a non-profit," said an analyst at Pivotal Research Group LLC. "They are looking for lots of ways to make money," adding that Facebook could sell video ads, a market that will reach more than $8bn in 2016, compared with $2.93bn last year.
Another money-making venture may lie in Facebook's Gifts feature. The social network could generate revenue from suggesting purchases related to user posts.
In the process, Facebook could streamline payments for goods sold through its site, and compete with online-payments provider PayPal.
Today, Facebook lets people use PayPal or credit cards to buy credits for virtual weapons and coins within games. It could facilitate payments directly, gaining a cut of each transaction.
At the TechCrunch Disrupt conference in September, Mr Zuckerberg hinted that Facebook was looking at offering a web search engine. Facebook could grab five per cent of the US search advertising market, which reached $15bn in 2012, within a year of introducing such a product.
As Facebook enters 2013 seeking to balance the demands of investors and members, one notable user weighed in on the predicament facing members who want to share information with friends, yet are worried about keeping data private.
A recent holiday photo posted on Facebook by Randi Zuckerberg, Mark Zuckerberg's sister, was spread via Twitter after it was seen by another user with access to the picture based on the social network's privacy settings. The photograph was taken down after a brief public spat.
"Digital etiquette: always ask permission before posting a friend's photo publicly," Randi Zuckerberg wrote in a later Twitter post. "It's not about privacy settings, it's about human decency."